Tax Free Lump Sum and 2025 Budget

MK62

LHW99 said:

westv said:

Cobbler_tone said:

I think a levy on pension funds would be an easy one as the average Jo/Joe wouldn’t have a clue what that meant.

The media would put that righf.

Not that many in the media picked up on Gordon Brown's cutting of dividend credits to pension funds.

I recall that being widely reported at the time......though whether the effect/impact was fully understood by many is another matter.
As for the reductions in the LTA (and hence in max tax free cash, protections notwithstanding), I suspect many just assumed it wouldn't affect them, and the majority were probably right about that....

LHW99

MK62 said:

LHW99 said:

westv said:

Cobbler_tone said:

I think a levy on pension funds would be an easy one as the average Jo/Joe wouldn’t have a clue what that meant.

The media would put that righf.

Not that many in the media picked up on Gordon Brown's cutting of dividend credits to pension funds.

I recall that being widely reported at the time......though whether the effect/impact was fully understood by many is another matter.
As for the reductions in the LTA (and hence in max tax free cash, protections notwithstanding), I suspect many just assumed it wouldn't affect them, and the majority were probably right about that....

I remember some reports, but none that explained what that would mean down the line. The attitude in most cases seemed to be - well done Gordon for finding something that didn't make (working) people worse off.

artyboy

RogerPensionGuy said:

Silvertabby said:

LHW99 said:

westv said:

Cobbler_tone said:

I think a levy on pension funds would be an easy one as the average Jo/Joe wouldn’t have a clue what that meant.

The media would put that righf.

Not that many in the media picked up on Gordon Brown's cutting of dividend credits to pension funds.

And I don't recall a media fuss over the reduction of the maximum tax free lump sum from its peak at £450K to its current £268K, although there is a lot of speculation about what may happen to it in the coming budget.  

A great example of how much was taken from hard working people who saved well in to pensions for so many years. 

The LTA was 1.8M and TFLS 25% was 450K as per the rules. 

However time went by and inflation rolled on. 

Then the LTA was reduced to 1M and TFLS 25% obviously reduced to 250K.

People's life & pension planning was ignored, as a minimum the old values could of been held up and rises only maybe 75% if inflation, but nothing of the like was adopted, it was just chopped. 

A total mess and removed lots of confidence about pensions. 

As mentioned, all this achieved and very very little press or backlash. 

Unless Income Tax, NI or VAT is increased, it's looking like multiple levers will be used, housing and pensions are nice convenient easy levers and they will generate a reasonable Tax Take without too much upset generaly I feel. 

But when those LTA/TFLS reductions happened, there was at least the option to protect what had been built up to that point, albeit with the requirement to no longer pay into a pension. 

So there are people (and I've seen some posts on here) that have protected TFLS in excess of the current £268k that can still be taken. 

It might come across as a bit "I'm alright Jack" but in the event there were any further draconian reductions to TFLS, I'd hope there would at least be some transitional protections for those that are already close to taking it (and may well have planned for it to pay off mortgages or other debts).

This government has already changed the rules to take a huge chunk out of my estate, so while you may not sympathise, you may at least understand just how hacked off I'll be if they come back for a second bite.

Cobbler_tone

artyboy said:

RogerPensionGuy said:

Silvertabby said:

LHW99 said:

westv said:

Cobbler_tone said:

I think a levy on pension funds would be an easy one as the average Jo/Joe wouldn’t have a clue what that meant.

The media would put that righf.

Not that many in the media picked up on Gordon Brown's cutting of dividend credits to pension funds.

And I don't recall a media fuss over the reduction of the maximum tax free lump sum from its peak at £450K to its current £268K, although there is a lot of speculation about what may happen to it in the coming budget.  

A great example of how much was taken from hard working people who saved well in to pensions for so many years. 

The LTA was 1.8M and TFLS 25% was 450K as per the rules. 

However time went by and inflation rolled on. 

Then the LTA was reduced to 1M and TFLS 25% obviously reduced to 250K.

People's life & pension planning was ignored, as a minimum the old values could of been held up and rises only maybe 75% if inflation, but nothing of the like was adopted, it was just chopped. 

A total mess and removed lots of confidence about pensions. 

As mentioned, all this achieved and very very little press or backlash. 

Unless Income Tax, NI or VAT is increased, it's looking like multiple levers will be used, housing and pensions are nice convenient easy levers and they will generate a reasonable Tax Take without too much upset generaly I feel. 

It might come across as a bit "I'm alright Jack" 

100% 

RogerPensionGuy

artyboy said:

RogerPensionGuy said:

Silvertabby said:

LHW99 said:

westv said:

Cobbler_tone said:

I think a levy on pension funds would be an easy one as the average Jo/Joe wouldn’t have a clue what that meant.

The media would put that righf.

Not that many in the media picked up on Gordon Brown's cutting of dividend credits to pension funds.

And I don't recall a media fuss over the reduction of the maximum tax free lump sum from its peak at £450K to its current £268K, although there is a lot of speculation about what may happen to it in the coming budget.  

A great example of how much was taken from hard working people who saved well in to pensions for so many years. 

The LTA was 1.8M and TFLS 25% was 450K as per the rules. 

However time went by and inflation rolled on. 

Then the LTA was reduced to 1M and TFLS 25% obviously reduced to 250K.

People's life & pension planning was ignored, as a minimum the old values could of been held up and rises only maybe 75% if inflation, but nothing of the like was adopted, it was just chopped. 

A total mess and removed lots of confidence about pensions. 

As mentioned, all this achieved and very very little press or backlash. 

Unless Income Tax, NI or VAT is increased, it's looking like multiple levers will be used, housing and pensions are nice convenient easy levers and they will generate a reasonable Tax Take without too much upset generaly I feel. 

But when those LTA/TFLS reductions happened, there was at least the option to protect what had been built up to that point, albeit with the requirement to no longer pay into a pension. 

So there are people (and I've seen some posts on here) that have protected TFLS in excess of the current £268k that can still be taken. 

It might come across as a bit "I'm alright Jack" but in the event there were any further draconian reductions to TFLS, I'd hope there would at least be some transitional protections for those that are already close to taking it ,and may well have planned for it to pay off mortgages or other debts).

This government has already changed the rules to take a huge chunk out of my estate, so while you may not sympathise, you may at least understand just how hacked off I'll be if they come back for a second bite.

Noted and good point, example of a hard working person with a big pension at say age 45 and they chop the LTA down with inflation going up, does the hard working person stop pension contributions to maintain old LTA or keep doing contributions, very tuff decisions like asking employers to stop making company contributions, the LTA was completely bonkers in my head.

But mostly noticed also, it was also a nice touch that lowering LTA down against inflation going up had lesser effects on DB and obviously government workers. 

Altho I have just now removed my full 268 TFLS as I had enough, I'm 99% feeling it won't be reduced and if it was they would indeed put in more protections that DC SIPP people need to navigate again. 

HedgehogRulez

RogerPensionGuy said:

artyboy said:

RogerPensionGuy said:

Silvertabby said:

LHW99 said:

westv said:

Cobbler_tone said:

I think a levy on pension funds would be an easy one as the average Jo/Joe wouldn’t have a clue what that meant.

The media would put that righf.

Not that many in the media picked up on Gordon Brown's cutting of dividend credits to pension funds.

And I don't recall a media fuss over the reduction of the maximum tax free lump sum from its peak at £450K to its current £268K, although there is a lot of speculation about what may happen to it in the coming budget.  

A great example of how much was taken from hard working people who saved well in to pensions for so many years. 

The LTA was 1.8M and TFLS 25% was 450K as per the rules. 

However time went by and inflation rolled on. 

Then the LTA was reduced to 1M and TFLS 25% obviously reduced to 250K.

People's life & pension planning was ignored, as a minimum the old values could of been held up and rises only maybe 75% if inflation, but nothing of the like was adopted, it was just chopped. 

A total mess and removed lots of confidence about pensions. 

As mentioned, all this achieved and very very little press or backlash. 

Unless Income Tax, NI or VAT is increased, it's looking like multiple levers will be used, housing and pensions are nice convenient easy levers and they will generate a reasonable Tax Take without too much upset generaly I feel. 

But when those LTA/TFLS reductions happened, there was at least the option to protect what had been built up to that point, albeit with the requirement to no longer pay into a pension. 

So there are people (and I've seen some posts on here) that have protected TFLS in excess of the current £268k that can still be taken. 

It might come across as a bit "I'm alright Jack" but in the event there were any further draconian reductions to TFLS, I'd hope there would at least be some transitional protections for those that are already close to taking it ,and may well have planned for it to pay off mortgages or other debts).

This government has already changed the rules to take a huge chunk out of my estate, so while you may not sympathise, you may at least understand just how hacked off I'll be if they come back for a second bite.

Noted and good point, example of a hard working person with a big pension at say age 45 and they chop the LTA down with inflation going up, dies the hard working person stop pension contributions to maintain old LTA or keep doing contributions, very tuff decisions like asking employers to stop making company contributions, the LTA was completely bonkers in my head.

But mostly noticed also, it was also a nice touch that lowering LTA down against inflation going up had lesser effects on DB and obviously government workers. 

Altho I have just now removed my full 268 TFLS as I had enough, I'm 99% feeling it won't be reduced and if it was they would indeed put in more protections that DC SIPP people need to navigate again. 

Sounds like me. I’m 46 with £860k in dc pension. Don’t intend to die for another 4 years though.

roadweary

I’m 55. About 800k in my pension. 

Plan was to work full time to 60, 4 days a week for another couple of years - then take 40-50k a year tax free till state pension contributes. 

I don’t have any ‘tax/growth sensible’ vehicles available should I take my 200k now. 

I’m risk averse and about as conflicted as I could be as to whether I withdraw some or all of the 200k now. 

MK62

roadweary said:

I’m 55. About 800k in my pension. 

Plan was to work full time to 60, 4 days a week for another couple of years - then take 40-50k a year tax free till state pension contributes. 

I don’t have any ‘tax/growth sensible’ vehicles available should I take my 200k now. 

I’m risk averse and about as conflicted as I could be as to whether I withdraw some or all of the 200k now. 

You would seem to be an ideal candidate for an index linked gilt ladder..........

RogerPensionGuy

HedgehogRulez said:

RogerPensionGuy said:

artyboy said:

RogerPensionGuy said:

Silvertabby said:

LHW99 said:

westv said:

Cobbler_tone said:

I think a levy on pension funds would be an easy one as the average Jo/Joe wouldn’t have a clue what that meant.

The media would put that righf.

Not that many in the media picked up on Gordon Brown's cutting of dividend credits to pension funds.

And I don't recall a media fuss over the reduction of the maximum tax free lump sum from its peak at £450K to its current £268K, although there is a lot of speculation about what may happen to it in the coming budget.  

A great example of how much was taken from hard working people who saved well in to pensions for so many years. 

The LTA was 1.8M and TFLS 25% was 450K as per the rules. 

However time went by and inflation rolled on. 

Then the LTA was reduced to 1M and TFLS 25% obviously reduced to 250K.

People's life & pension planning was ignored, as a minimum the old values could of been held up and rises only maybe 75% if inflation, but nothing of the like was adopted, it was just chopped. 

A total mess and removed lots of confidence about pensions. 

As mentioned, all this achieved and very very little press or backlash. 

Unless Income Tax, NI or VAT is increased, it's looking like multiple levers will be used, housing and pensions are nice convenient easy levers and they will generate a reasonable Tax Take without too much upset generaly I feel. 

But when those LTA/TFLS reductions happened, there was at least the option to protect what had been built up to that point, albeit with the requirement to no longer pay into a pension. 

So there are people (and I've seen some posts on here) that have protected TFLS in excess of the current £268k that can still be taken. 

It might come across as a bit "I'm alright Jack" but in the event there were any further draconian reductions to TFLS, I'd hope there would at least be some transitional protections for those that are already close to taking it ,and may well have planned for it to pay off mortgages or other debts).

This government has already changed the rules to take a huge chunk out of my estate, so while you may not sympathise, you may at least understand just how hacked off I'll be if they come back for a second bite.

Noted and good point, example of a hard working person with a big pension at say age 45 and they chop the LTA down with inflation going up, dies the hard working person stop pension contributions to maintain old LTA or keep doing contributions, very tuff decisions like asking employers to stop making company contributions, the LTA was completely bonkers in my head.

But mostly noticed also, it was also a nice touch that lowering LTA down against inflation going up had lesser effects on DB and obviously government workers. 

Altho I have just now removed my full 268 TFLS as I had enough, I'm 99% feeling it won't be reduced and if it was they would indeed put in more protections that DC SIPP people need to navigate again. 

Sounds like me. I’m 46 with £860k in dc pension. Don’t intend to die for another 4 years though.

It would be interesting to hear from any hard working people that got caught in 2010s zone of the LTA going up happy daze, but then reduced & reduced, it could of been hard to navigate decide what to do.

Luckily for me I was far away/lower from the horrible LTA bonkers zone and set going over the M1 limit by maybe 5 to 10% as a margin of common sense. 

Then saw the 1M limit go to M1.03 then M1.05 and then M1.073 and I was lucky due age and circumstances that I pushed a bit more in keeping that 5% 10% over limit in my mind as had it reduced yet again I was probably going to stop inputs and lose 10% employer contributions effectively, I was probably 10% over LTA when I stopped employment so I was again just lucky due personal circumstances. 

The LTA treatment was an utter shambles, I was only slightly affected as I reduced pension input the last few years of employment and did less overtime as 40%Tax/2%NI (42%) didn't fit well in my head, my employer was unhappy and upped overtime deals to entice others/me to do overtime due lack of suitable staff. 

Then the LTA was cancelled and that had the effect on my of leaving my SIPP cooking again due personal circumstances. 

I think shambles is probably too nice a word for the LTA treatment. 

I was lucky and thankful, but I really feel for people who had their hard work, planning and prudence totally disrespected by the system. 

Cobbler_tone

Always find it interesting when people make the connection of 'hard working' and being affluent. My lived experience tells me that the two are not mutually exclusive. Especially in terms of having to work hard to become wealthy. Maybe 'worked smarter' is a better term. Whilst I know some very hard workers who just make ends meet.